EXHIBIT 2A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AIM GROUP, INC.,
AIM SOLUTIONS, INC.,
ENTERPRISE SOLUTIONS GROUP, INC.
AND
▇▇▇▇▇▇ ROSWELL, JR.
Dated as of May 3, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER AND PLAN OF REORGANIZATION................................................... 1
SECTION 1.1. The Merger.......................................................................... 1
SECTION 1.2. Effects of the Merger............................................................... 2
SECTION 1.3. Conversion of Company Shares........................................................ 2
SECTION 1.4. Pre-Closing Transfers............................................................... 3
SECTION 1.5. Closing............................................................................. 3
ARTICLE II CONVERSION OF THE SHARES............................................................... 3
SECTION 2.1. Conversion of the Company's Shares.................................................. 3
SECTION 2.2. Adjustments; Delivery of Certificates............................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY................................. 8
SECTION 3.1. ORGANIZATION AND QUALIFICATION...................................................... 8
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS............................................ 8
SECTION 3.3. CAPITALIZATION...................................................................... 8
SECTION 3.4. AUTHORITY........................................................................... 9
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.......................................... 9
SECTION 3.6. PERMITS; COMPLIANCE................................................................. 9
SECTION 3.7. FINANCIAL STATEMENTS................................................................ 10
SECTION 3.8. NO UNDISCLOSED LIABILITIES.......................................................... 10
SECTION 3.9. ABSENCE OF CERTAIN CHANGES OR EVENTS................................................ 10
SECTION 3.10. ABSENCE OF LITIGATION.............................................................. 12
SECTION 3.11. BROKERS............................................................................ 12
SECTION 3.12. TAX MATTERS........................................................................ 13
SECTION 3.13. REAL PROPERTY...................................................................... 14
SECTION 3.14. INTELLECTUAL PROPERTY.............................................................. 15
SECTION 3.15. TANGIBLE ASSETS.................................................................... 17
SECTION 3.16. INVENTORY.......................................................................... 17
SECTION 3.17. CONTRACTS.......................................................................... 17
SECTION 3.18. NOTE RECEIVABLE AND ACCOUNTS RECEIVABLE............................................ 18
SECTION 3.19. POWERS OF ATTORNEY................................................................. 19
SECTION 3.20. INSURANCE.......................................................................... 19
SECTION 3.21. EMPLOYEES.......................................................................... 20
SECTION 3.22. EMPLOYEE BENEFITS.................................................................. 20
SECTION 3.23. GUARANTIES......................................................................... 21
SECTION 3.24. ENVIRONMENT, HEALTH AND SAFETY..................................................... 21
SECTION 3.25. CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY.................................... 22
SECTION 3.26. DELIVERY OF INFORMATION............................................................ 22
SECTION 3.27. PRODUCT AND SERVICE WARRANTIES..................................................... 22
SECTION 3.28. PRODUCT AND SERVICE LIABILITY...................................................... 23
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SECTION 3.29. CERTAIN BUSINESS PRACTICES......................................................... 23
SECTION 3.30. DISCLOSURE......................................................................... 23
SECTION 3.31. LIMITATION ON REPRESENTATIONS AND WARRANTIES....................................... 23
ARTICLE IIIA REPRESENTATIONS AND WARRANTIES OF SOLE STOCKHOLDER................................... 23
SECTION 3.1A. AUTHORIZATION OF TRANSACTION...................................................... 23
SECTION 3.2A. NONCONTRAVENTION.................................................................. 24
SECTION 3.3A. BROKERS' FEES..................................................................... 24
SECTION 3.4A. COMPANY SHARES.................................................................... 24
SECTION 3.5A. ACCREDITED INVESTOR............................................................... 24
SECTION 3.6A. INVESTMENT REPRESENTATIONS........................................................ 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER..................................... 26
SECTION 4.1. ORGANIZATION AND QUALIFICATION...................................................... 26
SECTION 4.2. AUTHORITY........................................................................... 26
SECTION 4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.......................................... 26
SECTION 4.4. LIMITATION ON REPRESENTATIONS AND WARRANTIES........................................ 27
SECTION 4.5. REPORTS; FINANCIAL STATEMENTS....................................................... 27
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS................................................ 27
SECTION 4.7. OWNERSHIP OF BUYER.................................................................. 28
SECTION 4.8. BROKERS............................................................................. 28
ARTICLE V COVENANTS............................................................................... 28
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE COMPANY................................................ 28
SECTION 5.2. NEGATIVE COVENANTS OF THE COMPANY................................................... 28
SECTION 5.3. NEGATIVE COVENANTS OF PARENT AND BUYER.............................................. 30
SECTION 5.4. ACCESS AND INFORMATION.............................................................. 30
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................. 31
SECTION 6.1. APPROPRIATE ACTION; CONSENTS; FILINGS............................................... 31
SECTION 6.2. TRANSFER OF COMPANY LIABILITIES PRIOR TO THE CLOSING DATE........................... 31
SECTION 6.3. PAYMENT BY COMPANY OF CERTAIN OUTSTANDING OBLIGATIONS PRIOR TO THE CLOSING DATE..... 32
SECTION 6.4. EMPLOYMENT AND NON-COMPETITION AGREEMENTS........................................... 32
SECTION 6.5. LANDLORD APPROVALS.................................................................. 32
SECTION 6.6. CONTRACT ASSIGNMENTS/NOVATIONS...................................................... 32
SECTION 6.7. BEST EFFORTS........................................................................ 32
SECTION 6.8. PUBLIC ANNOUNCEMENTS................................................................ 32
SECTION 6.9. TAIL INSURANCE...................................................................... 32
SECTION 6.10. NO COMPETING TRANSACTION........................................................... 33
SECTION 6.11. [Intentionally Deleted]............................................................ 33
SECTION 6.12. ADDITIONAL TAX MATTERS............................................................ 33
SECTION 6.13. REGISTRATION RIGHTS AGREEMENT..................................................... 34
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ARTICLE VII CLOSING CONDITIONS.................................................................... 34
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS AGREEMENT........................ 34
SECTION 7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER AND/OR PARENT......................... 35
SECTION 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SOLE STOCKHOLDER........ 37
ARTICLE VIII TERMINATION, AMENDMENT, WAIVER AND INDEMNIFICATION................................... 37
SECTION 8.1. TERMINATION......................................................................... 37
SECTION 8.2. INVESTIGATION....................................................................... 38
SECTION 8.3. AMENDMENT........................................................................... 38
SECTION 8.4. WAIVER.............................................................................. 38
SECTION 8.5. FEES, EXPENSES AND OTHER PAYMENTS................................................... 38
SECTION 8.6. INDEMNIFICATION..................................................................... 38
ARTICLE IX GENERAL PROVISIONS..................................................................... 40
SECTION 9.1. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS......................... 40
SECTION 9.2. NOTICES............................................................................. 40
SECTION 9.3. CERTAIN DEFINITIONS................................................................. 40
SECTION 9.4. HEADINGS; CONSTRUCTION.............................................................. 48
SECTION 9.5. SEVERABILITY........................................................................ 48
SECTION 9.6. ENTIRE AGREEMENT AND MODIFICATION................................................... 48
SECTION 9.7. ASSIGNMENT.......................................................................... 48
SECTION 9.8. PARTIES IN INTEREST................................................................. 48
SECTION 9.9. WAIVER; REMEDIES CUMULATIVE......................................................... 48
SECTION 9.10. FURTHER ASSURANCES................................................................. 49
SECTION 9.11. GOVERNING LAW...................................................................... 49
SECTION 9.12. JURISDICTION; SERVICE OF PROCESS................................................... 49
SECTION 9.13. COUNTERPARTS....................................................................... 49
EXHIBITS DESCRIPTION
Exhibit A Form of Escrow Agreement
Exhibit A-1 Form of Promissory Note for ▇▇▇▇▇▇ Roswell, Jr.
Exhibit B-1 Form of Employment Agreement for ▇▇▇▇▇▇ Roswell, Jr.
Exhibit B-2 Form of Employment Agreement for ▇▇▇▇▇▇ Roswell, Sr.
Exhibit B-3 Form of Key Employment Agreement
Exhibit C Form of Non-Competition Agreement for ▇▇▇▇▇▇ Roswell, Jr.
Exhibit D Legal Opinion of Counsel to the Company
Exhibit E Legal Opinion of Counsel to Parent and Buyer
Exhibit F Transferred Lease(s) and Landlord Consent(s)
Exhibit G Form of Registration Rights Agreement
Exhibit H Certificates of Merger
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SCHEDULE
NUMBER DESCRIPTION
1.1 Purchased Shares
1.4 Pre-Closing Transfers
2.1(e) Calculation of Adjusted Working Capital
2.1(e)(ii) Trial Balance
3.2 Officers and Directors; Certificate of Incorporation and By-Laws;
Minutes; Stock Certificates and Transfer Books
3.5 Filings and Consents
3.7 Financial Statements
3.8 Liabilities
3.9 Certain Changes or Events of the Company
3.10 Litigation Matters
3.11 Brokers
3.12(a) Tax Returns Filing Matters
3.12(c) Tax Returns
3.12(f) Additional Tax Matters
3.12(g) Unpaid Taxes
3.13(a) Real Property Owned
3.13(b) Real Property Leased or Subleased
3.14(c) Intellectual Property Owned
3.14(d) Intellectual Property Licensed, Sublicensed, Agreements or Permission
3.15 Tangible Assets
3.16 Inventory
3.17 Contracts
3.20 Insurance Policies
3.21 Employees
3.22 Employee Benefit Plans
3.24 Environmental Matters
3.25 Certain Business Relationships with the Company
3.27 Standard Sale, Lease and Performance Terms and Conditions
5.2 Negative Covenants
6.9 Evidence of Discontinued Products and Operations Coverage Liability Insurance
7.2(c) Contracts or Agreements Requiring Consents or Waivers
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 3, 1999 (this
"AGREEMENT"), by and among AIM Group, Inc., a Delaware corporation ("PARENT");
AIM Solutions, Inc., a Delaware corporation ("BUYER") and a wholly-owned
subsidiary of Parent; Enterprise Solutions Group, Inc., a Florida corporation
(the "Company"); and ▇▇▇▇▇▇ Roswell, Jr., the sole stockholder of the Company
("SOLE STOCKHOLDER").
W I T N E S S E T H:
WHEREAS, the Sole Stockholder is the sole owners of all the issued and
outstanding shares (all of such shares being collectively referred to as the
"SHARES") of the common stock, no par value per share, of the Company (the
"COMPANY COMMON STOCK"), and the Buyer and Company desire to merge (the
"Merger") the Company with and into the Buyer, all upon the terms and subject
to the conditions of this Agreement; and
WHEREAS, Parent and the Sole Stockholder are made a party hereto for the
purposes as set forth herein; and
WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 9.3.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER AND PLAN OF REORGANIZATION
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, as promptly as practicable following the satisfaction or waiver of the
conditions set forth in Articles III, IIIA and IV hereof, unless the parties
shall otherwise agree, articles of merger in the forms attached hereto as
Exhibit H (the "CERTIFICATES OF MERGER") providing for the Merger of the
Company with and into Buyer shall be duly prepared and executed by Buyer and
the Company, and filed by Buyer, as the surviving corporation (sometimes also
referred to as the "SURVIVING CORPORATION"), in accordance with the relevant
provisions of the Florida Business Corporation Act and the Delaware General
Corporation Law, and the parties hereto shall take any other actions required
by law to make the Merger effective. Following the Merger, Buyer, with all its
purposes, objects, rights, privileges, powers and franchises, shall continue,
and the Company shall cease to exist. The Merger shall be effective at the
time (the "EFFECTIVE TIME") and on the date (the "EFFECTIVE DATE") that
properly executed Certificates of Merger are duly filed with the Department of
State of Florida and the Secretary of State of Delaware under Section 607.1105
of the Florida Business Corporation Act and Section 252 of the Delaware
General Corporation Law; provided, however, that by mutual consent of the
parties, such Certificates of Merger may provide for a later date of
effectiveness of the Merger not more than thirty (30) days after such filing.
After the Effective Time and the Effective Date, a closing shall take place at
the offices of Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, in Washington, D.C., as set
forth in Section 1.5 hereof.
SECTION 1.2 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 607.1107 of the Florida Business Corporation Act and Section
259 of the Delaware General Corporation Law. As of the Effective Time, the
Surviving Corporation shall be a wholly-owned subsidiary of Parent. The
Articles of Incorporation of the Buyer shall remain the Articles of
Incorporation of the Surviving Corporation after the Effective Date unless and
until amended in accordance with their terms and as provided by law. The
bylaws of Buyer as in effect on the Effective Date shall be the bylaws of the
Surviving Corporation unless and until amended in accordance with their terms
and as provided by law.
SECTION 1.3 CONVERSION OF THE COMPANY SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Buyer, the
Company or the holder of any of the following securities:
(a) Any shares of capital stock of the Company which are held in
the treasury of the Company shall be cancelled.
(b) All issued and outstanding shares of capital stock of Buyer
shall be converted into and become One Hundred (100) issued and outstanding
shares of common stock of the Surviving Corporation.
(c) Subject to Sections 1.1, 1.5, 2.1 and 2.2 of this Agreement,
the Shares shall be converted into the right to receive a total of One Million
Nine Hundred Fifty Thousand Dollars ($1,950,000.00) ("PURCHASE PRICE") for the
Shares by delivery of: (i) Two Hundred Fifty Thousand Dollars ($250,000.00) in
cash payable by wire transfer or delivery of other immediately available funds
at the Closing by Buyer to the Escrow Agent, after Escrow Agent has received a
stock certificate from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ representing 100 shares of Company
Common Stock, with the Escrow Agent being hereby instructed to deliver the
funds on behalf of the Sole Stockholder to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; (ii) Three Hundred
Thousand Dollars ($300,000.00) in cash payable by wire transfer or delivery of
other immediately available funds at the Closing by the Buyer to the Sole
Stockholder; (iii) the issuance to the Sole Stockholder at Closing of a
subordinated promissory note in the principal amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), in the form attached hereto as EXHIBIT A-1
(the "NOTE"), having a term of two (2) years and bearing simple interest at
the rate of three percent (3%) per annum, and (iv) the issuance of One Million
One Hundred Fifty Thousand Dollars ($1,150,000.00) worth of common stock of
Parent, based upon a per share price of $3.00 per share (the "AIM Common
Stock"), or Three Hundred Eighty-Three Thousand Three Hundred Thirty-Three
(383,333) shares of AIM Common Stock, with One Hundred Ninety-One Thousand Six
Hundred Sixty-Seven (191,667) of those shares to be distributed to the Sole
Stockholder at Closing and the remaining One Hundred Ninety-One Thousand Six
Hundred Sixty Six (191,666) shares to be held in escrow and distributed to the
Sole Stockholder on the following schedule: (1) fifty percent (50%) of the
escrowed shares shall be distributed to the Sole Stockholder on the first
anniversary of the Closing Date and (2) the remaining fifty percent (50%) of
the escrowed shares shall be distributed to the Sole Stockholder on the second
anniversary of the Closing Date, together with such other terms and conditions
as set forth in the form of Escrow Agreement attached hereto as EXHIBIT A. The
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Purchase Price shall be subject to pre-Closing adjustments and post-Closing
adjustments as set forth in Section 2.1(e) below. The consideration for the
covenant not to compete set forth in the Non-Compete Agreement attached hereto
as EXHIBIT C shall equal Ten Dollars ($10.00) and other good and valuable
consideration, and shall be payable at the Closing out of the cash portion of
the Purchase Price.
SECTION 1.4 PRE-CLOSING TRANSFERS. Notwithstanding anything contained
herein to the contrary, prior to the Closing Date in accordance with Sections
6.2 and 6.3 hereof, the Company shall transfer, distribute and/or dispose of
all of the following items (listed in detail on SCHEDULE 1.4 attached hereto)
to the Sole Stockholder or to a third party at the direction of the Sole
Stockholder, all with the effect that the following items shall not be owned
by the Company, nor assumed by Buyer, at the Closing Date: (i) any notes or
accounts receivable due to the Company from its officers, directors or the
Sole Stockholder, or due from the Company to its officers, directors or the
Sole Stockholder; (ii) any real property owned by the Company (and any
fixtures located thereon) and any mortgages, deeds of trust or other
indebtedness on or relating to such real property for which the Company is
liable in any manner whatsoever; (iii) any automobiles or vehicles leased or
owned by the Company that are used for personal purposes by the Sole
Stockholder or any employee of the Company, and any leases or indebtedness on
or relating to such automobiles or vehicles for which the Company are liable
in any manner whatsoever; (iv) all life insurance policies owned by the
Company or paid for by the Company; and (v) all of the Company's Liabilities
reflected on the Balance Sheet, except for those expressly included in the
calculation of Adjusted Working Capital set forth in Section 2.1(e) hereto.
Furthermore, prior to the Closing Date, the Company shall fully pay all
outstanding pension plan and profit sharing contributions due from the
Company, and the Company shall terminate all such plans on or prior to the
Closing Date.
SECTION 1.5 CLOSING. The closing of the Merger (the "CLOSING") will take
place at the offices of Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, Washington, D.C., at
10:00 A.M.(EDT) no later than four (4) business days after receipt by Parent
of confirmation from the Florida Department of State and the Delaware
Secretary of State that the Certificates of Merger have been approved as
filed, or at such other place, time and date as the parties may agree upon in
writing (the "CLOSING DATE").
ARTICLE II
CONVERSION OF THE SHARES
SECTION 2.1. CONVERSION OF THE COMPANY'S SHARES.
(a) At the Closing, Parent and Buyer shall (i) deliver Two Hundred
Fifty Thousand Dollars ($250,000.00) in cash payable by wire transfer or
delivery of other immediately available funds to Freedman, Levy, ▇▇▇▇▇ &
▇▇▇▇▇▇▇, as escrow agent ("ESCROW AGENT"), after Escrow Agent has received a
stock certificate from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ representing 100 shares of Company
Common Stock, with the Escrow Agent being hereby instructed to deliver the
3
funds on behalf of the Sole Stockholder to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; (ii) Three Hundred
Thousand Dollars ($300,000.00) in cash payable by wire transfer or delivery of
other immediately available funds to the Sole Stockholder; (iii) issue the
Note attached hereto as Exhibit A-1 to the Sole Stockholder; (iv) issue One
Hundred Ninety-One Thousand Six Hundred Sixty-Seven (191,667) shares of AIM
Common Stock to the Sole Stockholder at Closing; (v) deliver One Hundred
Ninety-One Thousand Six Hundred Sixty Six (191,666) shares of AIM Common Stock
in the name of the Sole Stockholder to the Escrow Agent , with such shares to
be held in escrow and distributed to the Sole Stockholder as provided in
Section 1.3 hereof. All such certificates of AIM Common Stock shall bear the
restrictive legend contained in Section 3.6A(vi) hereof.
(b) At the Closing, the holder(s) of certificate(s) which
immediately prior to the Effective Time represented all of the Company's
Shares (the "CERTIFICATES") shall deliver the Certificates to Parent, and the
Certificates shall be in such form and have such other provisions as as Parent
and the Company may reasonably specify. After the Effective Time, upon
surrender of the Certificates to Parent and subject to the terms and vesting
schedule of the Escrow Agreement, the Sole Stockholder shall be entitled to
receive in exchange for such Certificates (i) the certificates representing
the whole shares of AIM Common Stock (no fractional shares of AIM Common Stock
shall be issued) which such holder has the right to receive pursuant to the
provisions of this Agreement, and the Certificates so surrendered shall
forthwith be cancelled, and (ii) the Note and cash amount provided in Section
2.1(a) hereof.
(c) Following the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Company Shares, which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(d) No certificate or scrip representing fractional shares of AIM
Common Stock shall be issued upon the surrender for exchange of Certificates,
and any fractional share interests resulting from the conversion of the
Company Shares into the shares of AIM Common Stock shall be rounded to the
nearest whole share of AIM Common Stock within the total maximum number of
383,333 shares of AIM Common Stock to be issued in the Merger to the Sole
Stockholder.
(e) PURCHASE PRICE ADJUSTMENT.
(i) Notwithstanding anything contained in this Agreement to
the contrary, the Sole Stockholder guarantees that the Company's adjusted
working capital measured as of the close of business on the Closing Date (the
"ADJUSTED WORKING CAPITAL") shall be no less than Two Hundred Thousand Dollars
($200,000.00). Adjusted Working Capital shall be comprised of cash, Accounts
Receivable, prepaid expenses, deposits, 1999 fixed asset purchases, less
accruals, customer deposits, deferred revenues, bank debt and trade accounts
payable incurred in the Ordinary Course of Business ("Accounts Payable") of
the Company in the amounts and values set forth below in this Section
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2.1(e)(i), but as adjusted as hereinafter provided in Section 2.1(e). The
calculation of Adjusted Working Capital and its components as of the Closing
Date shall be set forth on SCHEDULE 2.1(E).
(ii) If, on the Closing Date, Adjusted Working Capital is
less than the amount set forth in Section 1.2(c)(i) above, the cash portion of
the Purchase Price payable pursuant to Section 2.1(a) shall be reduced by the
amount of such deficiency. Any material change between December 31, 1998 and
the Closing Date in the Company's assets and liabilities (other than assets
and liabilities included in the calculation of Adjusted Working Capital, as
set forth on SCHEDULE 2.1(E) and any assets and liabilities transferred to the
Sole Stockholder as part of the pre-closing transfers pursuant to Section 1.4
hereof) will also result in an appropriate adjustment to the Purchase Price
("Purchase Price Adjustment") stated in Section 1.3. For purposes of this
Section 2.1(e)(ii), a "material change" is a change that is greater than Five
Thousand Dollars ($5,000). The amounts to be determined under this Section
2.1(e)(ii) shall be based upon an estimated trial balance to be prepared by
the Company and presented to the Buyer on or immediately prior to the Closing
Date. This trial balance shall be attached hereto as SCHEDULE 2.1(E)(II).
(iii) If, on the last day of the month in which the date
that is nine (9) months after the Closing Date is contained (the "POST-CLOSING
DATE ADJUSTMENT DATE"), Adjusted Working Capital measured as of the Closing
Date is less than the amount set forth in Section 2.1(e)(i) above, the
Purchase Price shall be reduced by the amount of such deficiency, less the
amount of any adjustment to the Purchase Price made under Section 2.1(e)(ii)
above. The Buyer shall be entitled to reduce the first installment payment of
principal and interest on the Note by the amount of such deficiency, and next
to reduce the outstanding principal balance of the Note by any remaining
deficiency.
(iv) If, on the Post-Closing Adjustment Date, Adjusted
Working Capital is greater than the amount set forth in Section 2.1(e)(i)
above, the Purchase Price shall be increased by half of the amount by which
Adjusted Working Capital exceeds $200,000, and the Buyer shall pay the Sole
Stockholder half of the amount by which Adjusted Working Capital exceeds
$200,000 in cash by wire transfer or delivery of other immediately available
funds, with Buyer retaining the other half of that excess, subject to the
provisions of Sections 2.1(e)(v) and (vi) hereof. Notwithstanding anything
herein to the contrary, the Sole Stockholder shall be entitled to remove his
portion of the excess, based on the calculation of Adjusted Working Capital in
Schedule 2.1(e), immediately prior to Closing, with the parties agreeing to
make any necessary adjustments to that amount on the Post-Closing Adjustment
Date.
(v) Solely for purposes of determining Adjusted Working
Capital under Sections 2.1(e)(iii) and (iv) above, the amount of the Accounts
Receivable component of Adjusted Working Capital shall be determined by
comparing Accounts Receivable of the Company measured at the Closing Date and
the amount of such Accounts Receivable actually collected by Buyer for the
period beginning on the day following the Closing Date and ending on the
Post-Closing Adjustment Date. If Buyer subsequently collects any Accounts
Receivable that were uncollected as of the Post-Closing Adjustment Date, Buyer
5
shall be entitled to retain any such collections.
(vi) The amounts to be determined under Sections
2.1(e)(iii), (iv) and (v) shall be based upon a final Balance Sheet dated as
of the Closing Date. Buyer may choose to have such final Balance Sheet
prepared by a nationally-recognized, independent certified public accounting
firm selected by the Buyer. Buyer shall deliver the calculation and
determination of the Purchase Price Adjustment to the Sole Stockholder within
forty-five (45) days after the Post-Closing Adjustment Date. Such calculation
shall be deemed conclusive and binding on the parties for purposes of
computing the Purchase Price Adjustment unless the Sole Stockholder objects
pursuant to the provisions of this Section 2.1(e)(vi). If the Sole Stockholder
has any objections to the determination of the Purchase Price Adjustment under
this Section 2.1(e)(vi), then the Sole Stockholder must deliver a detailed
statement describing the Sole Stockholder's objections to the Buyer within
thirty (30) days after receiving the appropriate determination of the Purchase
Price Adjustment and supporting calculations from the Buyer. The Buyer and the
Sole Stockholder will use reasonable efforts to resolve any such objections
themselves. Any dispute regarding the determination of the Purchase Price
Adjustment shall be resolved in the manner set forth in Section 2.1(f) hereof.
If the Sole Stockholder does not provide such written notice to Buyer within
such 30-day period, then Buyer shall make the appropriate Purchase Price
Adjustment in accordance with this Section 2.1(e) within ten (10) days after
the date by which the Sole Stockholder was required to provide such written
notice under this Section 2.1(e)(vi).
(vii) In the event the Purchase Price Adjustment results in
a reduction in the principal amount of the original Note, the original Note
shall be deemed to have been canceled on the Post-Closing Adjustment Date, and
the Sole Stockholder shall have the right to receive a replacement promissory
note (the "REPLACEMENT NOTE") from the Buyer. Upon surrender of the original
Note for cancellation to the Buyer, the Buyer shall promptly issue the
Replacement Note to the Sole Stockholder, which Replacement Note shall have a
principal balance equal to the principal balance of the original Note less the
portion of the Purchase Price Adjustment that results in a reduction in the
principal amount of the original Note. The Replacement Note shall be
guaranteed by Parent. The reduced principal amount and interest on the reduced
principal amount of the Replacement Note shall be payable on the same terms,
payment dates and conditions as the original Note.
(f) DISPUTE RESOLUTION MECHANISM. If the parties do not obtain a
final resolution of a dispute regarding the determination of the Purchase
Price Adjustment under Section 2.1(e) hereof within thirty (30) days after
Buyer has received the statement of objections from the Sole Stockholder, the
Buyer and the Sole Stockholder will select an accounting firm mutually
acceptable to them to resolve any remaining objections. If Buyer and Sole
Stockholder are unable to agree on the choice of an accounting firm, Buyer
will select a nationally-recognized, independent certified public accounting
firm. The determination of any accounting firm so selected will be set forth
in writing and will be conclusive and binding upon the parties. Buyer will
revise the determination of the Purchase Price Adjustment, as the case may be
6
and as appropriate, to reflect the resolution of any objections thereto.
(i) In the event the parties submit any unresolved
objections with respect to the determination of the amount of the Purchase
Price Adjustment to an accounting firm for resolution as provided herein,
Buyer and Sole Stockholder will share responsibility for the fees and expenses
of the accounting firm as follows:
(A) if the accounting firm agrees with Buyer's
determination of the amount of the Purchase Price Adjustment (with the amount
so determined by the Buyer referred to herein as the "BUYER'S VALUE"), Sole
Stockholder will be responsible for all of the fees and expenses of the
accounting firm incurred in connection with the preparation of the
determination with which the accounting firm agrees;
(B) if the accounting firm agrees with the Sole
Stockholder's determination of the amount of the Purchase Price Adjustment
(with the amount so determined by the Sole Stockholder referred to herein as
the "SOLE STOCKHOLDER'S VALUE"), Buyer will be responsible for all of the fees
and expenses of the accounting firm incurred in connection with the
preparation of the determination with which the accounting firm agrees; and
(C) if the accounting firm determines that the amount
of the Purchase Price Adjustment (the "ACTUAL VALUE") is different from either
the Buyer's Value or the Sole Stockholder's Value, the party whose
determination is closest to the Actual Value will be responsible for that
fraction of the fees and expenses of the accounting firm equal to (x) the
difference between the closest party's determination and the Actual Value over
(y) the greater of the difference between (I) the Buyer's Value and the Sole
Stockholder's Value and (II) the other party's determination (which is
furthest from the Actual Value) and the Actual Value, and the other party will
be responsible for the remainder of the fees and expenses.
(ii) Each party will make the work papers and back-up
materials used in determining the Buyer's Value and Sole Stockholder's Value
available to the other party and their accountants and other representatives
at reasonable times and upon reasonable notice at any time during (I) the
preparation of Buyer's Value or Sole Stockholder's Value, (II) the review by
either party of the other party's determination of the Purchase Price
Adjustment, and (III) the resolution by the parties of any objections thereto.
SECTION 2.2 ADJUSTMENTS; DELIVERY OF CERTIFICATES. If, between the date
of this Agreement and the Effective Time, the Company Shares or the shares of
AIM Common Stock shall have been exchanged into a different number of shares
or a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within such period, the amount
into which the Company Shares will be converted in the Merger shall be
correspondingly adjusted.
7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Each of the Company and the Sole Stockholder hereby represent and
warrant, jointly and severally, to Parent and Buyer as follows as of the date
of this Agreement and as of the Closing Date:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary. The Company has no Subsidiaries, and does not,
directly or indirectly, own or control any investment or interest (whether in
the form of debt or equity) in any other Person.
SECTION 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. SCHEDULE 3.2
contains (i) a list of the officers and directors of the Company, (ii)
complete and correct copies of the Company's Certificate of Incorporation and
By-Laws or equivalent organizational documents, in each case as amended or
restated, as in effect as of the Closing Date, (iii) the minute books relating
to all meetings of stockholders, board of directors and committees of the
Company, (iv) stock certificate books the Company and (v) stock transfer books
of the Company. The Company is not in violation of any of the provisions of
its Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated. In addition, the minute books
(containing the record of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books and
the stock transfer books of the Company are correct and complete.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of Ten Thousand (10,000) shares of Company Common Stock, of which Two
Hundred (100) shares are issued and outstanding as of the date of this
Agreement, and (a) all of which Shares are duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights created by
statute, the Company's Certificate of Incorporation or By-Laws or any
agreement to which the Company is a party or bound, (b) zero (0) shares of
Company Common Stock were held in treasury of the Company and (c) all of the
issued and outstanding shares of Company Common Stock are owned by and held in
the name of the Sole Stockholder. There are no bonds, debentures, notes or
other indebtedness, issued or outstanding, having the right to vote on any
matters on which the Company's stockholders may vote. There are no options,
warrants, calls or other rights (including subscription rights or registration
rights), agreements, proxies, voting rights agreements, voting trusts,
arrangements or commitments of any character, presently outstanding, which (i)
obligate the Company to issue, deliver or sell shares of its capital stock or
debt securities, (ii) obligate the Company to grant, extend or enter into any
8
such option, warrant, call or other such right, agreement, arrangement or
commitment, (iii) obligate the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock, or (iv) relate to the issued or
unissued capital stock of, or other equity interests in, the Company.
SECTION 3.4 AUTHORITY. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceeding on the part of the Company
is necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery
thereof by the Sole Stockholder, Parent and Buyer, constitutes the legal,
valid and binding obligation of the Company enforceable in accordance with its
terms.
SECTION 3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in SCHEDULE 3.5, the execution and
delivery of this Agreement by the Company does not, and the performance of
this Agreement by the Company will not (i) conflict with or violate the
Company's Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated, (ii) conflict with or violate
any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment or decree (collectively, "LA ") and applicable to
the Company or by which any of its properties is bound or subject to, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of an Encumbrance on, any of the
properties or Assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the
Company or any of its properties is bound or subject.
(b) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not,
require the Company to obtain any consent, approval, authorization or permit
of, or to make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign ("GOVERNMENTAL ENTITIES") based on
Laws and other requirements of Governmental Entities.
SECTION 3.6 PERMITS; COMPLIANCE. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted (collectively, the "COMPANY PERMITS"), and there is no action,
proceeding or investigation pending or threatened regarding suspension or
cancellation of any of the Company Permits. The Company is not in conflict
with, or in default or violation of (a) any Law applicable to the Company or
9
which any of its properties is bound by or subject to or (b) any of the
Company Permits. The Company has not received from any Governmental Entity any
written notification with respect to possible conflicts, defaults or
violations of Laws.
SECTION 3.7 FINANCIAL STATEMENTS. SCHEDULE 3.7 contains true, correct
and complete copies of the audited balance sheet of the Company as of December
31, 1998 (the "BALANCE SHEET"), and the related statements of operations,
statements of cash flows and statements of stockholders equity for the period
then ended, and the notes and schedules thereto, together with the report
thereon of ▇▇▇▇▇▇▇, Handy & ▇▇▇▇, L.L.P. of North Miami (collectively, the
"FINANCIAL STATEMENTS"). The Financial Statements are attached hereto as
SCHEDULE 3.7 and have been prepared from books and records of the Company on a
basis consistent with preceding years and throughout the periods involved
(except as otherwise noted therein). The Financial Statements fairly present
the financial condition, results of operations and changes in cash flows of
the Company at the dates thereof and for the periods indicated in the
Financial Statements. No financial statement of any Person other than the
Company is required by GAAP to be included in the Financial Statements.
SECTION 3.8 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
3.8, the Company has no liabilities or other obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise ("LIABILITY" or "LIABILITIES"), and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a Liability, other than Liabilities fully reflected or reserved
against on the face of the Balance Sheet as adjusted for Liabilities incurred
in the Ordinary Course of Business since December 31, 1998 through the Closing
Date.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1998, there has not been any adverse change in the business, financial
condition, operations, results of operations or future prospects of the
Company. Without limiting the generality of the foregoing, since that date and
except as otherwise disclosed in SCHEDULE 3.9:
(a) the Company has not sold, leased, transferred, or assigned any
of its Assets, tangible or intangible, other than sales to its customers for
fair consideration in the Ordinary Course of Business;
(b) the Company has not entered into any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) outside the Ordinary Course of Business;
(c) no party (including the Company) has accelerated, terminated,
modified or canceled any agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses) to which the Company is a
party or by which the Company is bound;
(d) the Company has not imposed, granted, allowed or consented to
any Security Interest upon any of its Assets;
10
(e) the Company has not made any capital expenditure (or series of
related capital expenditures) either involving more than an aggregate of Five
Thousand Dollars ($5,000.00), unless otherwise approved in writing by the
Buyer, or outside the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or Assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(g) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation;
(h) the Company has not delayed or postponed the payment of
Accounts Payable, Accrued Expenses or other Liabilities outside the Ordinary
Course of Business;
(i) the Company has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims);
(j) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the Company's
Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated prior to March 15,1996;
(l) the Company has not issued, sold or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(m) the Company has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(n) the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its Assets;
(o) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers and employees;
(p) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
11
(q) the Company has not granted any increase in the compensation
of any of its directors, officers and employees;
(r) the Company has not adopted, amended, modified or terminated
any bonus, profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers and employees (or
taken any such action with respect to any other Employee Benefit Plan);
(s) the Company has not made any other change in employment terms
for any of its directors, officers and employees outside the Ordinary Course
of Business;
(t) the Company has not made any political contribution or pledged
to make any charitable contribution;
(u) the Company has not done any act, or failed to do any act
which it had a duty or obligation to perform, which has or could result in a
breach of any obligation of the Company;
(v) there has not been any other occurrence, event, incident,
action, failure to act or transaction outside the Ordinary Course of Business
involving the Company; and
(w) the Company has not committed to any of the foregoing.
SECTION 3.10 ABSENCE OF LITIGATION. Except as set forth on SCHEDULE
3.10, (a) there is no claim, action, suit, litigation, proceeding, arbitration
or investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or threatened against the
Company or any properties or rights of the Company, and (b) the Company is not
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with or continuing investigation by, any court
or Governmental Entity, or any judgment, order, writ, injunction, decree or
award of any court, Governmental Entity or arbitrator. In respect of the
matters relating to or arising in connection with the actions set forth in
SCHEDULE 3.10, to the best of the Knowledge of the Company and the Sole
Stockholder there is no fact, event, condition, circumstance or other matter
which either has, or is reasonably likely to have resulted in, an event or
determination having a Company Material Adverse Effect. The Company has
delivered to Parent or Buyer copies of all pleadings, correspondence and other
documents relating to each matter disclosed in SCHEDULE 3.10.
SECTION 3.11 BROKERS. Except as set forth on SCHEDULE 3.11, no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a correct copy of all agreements
between the Company and any broker, finder or investment adviser pursuant to
which such firm or individual would be entitled to any payment relating to
the Merger. The Purchase Price shall be reduced to reflect the payment of such
12
fees by the Company in the event any such fees are not paid by the Sole
Stockholder or by the Company prior to the Closing Date.
SECTION 3.12 TAX MATTERS.
(a) Except as set forth on Schedule 3.12(a) hereto, the Company
has filed all Tax Returns in a timely manner that it was required to file. All
such Tax Returns were correct and complete in all respects. All Taxes owed by
the Company (whether or not shown on any Tax Return) have been paid. The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security Interests on
any of the Assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax or file any Tax Return.
(b) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(c) There is no dispute or claim concerning any Liability for
Taxes of the Company claimed or raised by any Governmental Entity. SCHEDULE
3.12(C) lists all federal, state, local, and foreign income Tax Returns filed
with respect to the Company for taxable periods ended on or after December 31,
1993, and indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. The Company has
delivered to Parent correct and complete copies of all federal income Tax
Returns, examination reports and statements of deficiencies assessed against
or agreed to by the Company since December 31, 1993.
(d) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) The Company has not filed any consent under Section 341(f) of
the Code concerning collapsible corporations. The Company has not made any
payments, or is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. The
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. The Company is not a party
to any Tax allocation or sharing agreement. The Company (i) has not been a
member of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) and (ii) has
no Liability for the Taxes of any Person (other than the Company) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor by contract, or otherwise.
13
(f) SCHEDULE 3.12(F) sets forth the following information with
respect to the Company as of the most recent practicable date: (A) the
adjusted tax basis of the Company in its Assets; (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Company; and
(C) the amount of any inter-company items or any deferred gain or loss
allocable to the Company with respect to any inter- company transaction.
(g) SCHEDULE 3.12(G) sets forth the amount of all unpaid Taxes of
the Company as of the Closing Date.
SECTION 3.13 REAL PROPERTY.
(a) SCHEDULE 3.13(A) lists and describes all real property owned
by the Company. The Company represents and warrants that no Lien or
Encumbrance exists with respect to any such property, except as fully
described on SCHEDULE 3.13(A). The Company will not own any real property as
of the Closing Date.
(b) SCHEDULE 3.13(B) lists and describes briefly all real property
leased or subleased to the Company. The Company has delivered to Buyer correct
and complete copies of the leases and subleases listed in SCHEDULE 3.13(B).
With respect to each lease and sublease listed in SCHEDULE 3.13(B):
(i) to the best Knowledge of the Company and the Sole
Stockholder, the lease or sublease is legal, valid, binding, enforceable and
in full force and effect;
(ii) to the best Knowledge of the Company and the Sole
Stockholder, the consummation of the Merger will not affect the terms or
enforceability of the lease or sublease;
(iii) to the best Knowledge of the Company and the Sole
Stockholder, no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(iv) to the best Knowledge of the Company and the Sole
Stockholder, no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
14
(vii) to the best Knowledge of the Company and the Sole
Stockholder, all facilities leased or subleased thereunder have received all
approvals of Governmental Entities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations; and
(viii) all facilities leased or subleased thereunder are
supplied with functional utilities and other services necessary for the normal
and usual operation of said facilities.
SECTION 3.14 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property necessary for
the operation of the Company's business as presently conducted. Each item of
Intellectual Property owned or used by the Company is owned or available for
use by the Company on identical terms and conditions immediately subsequent to
the Closing Date. The Company has taken all reasonably necessary and desirable
action to maintain and protect each item of Intellectual Property that it owns
or uses.
(b) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of any third party. No Sole Stockholder, director or officer
(or employee with responsibility for Intellectual Property matters) of the
Company has ever received any oral or written charge, complaint, claim, demand
or notice alleging any such interference, infringement, misappropriation or
violation (including any claim that the Company must license or refrain from
using any Intellectual Property rights of any third party). To the Company's
Knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Company.
(c) SCHEDULE 3.14(C) identifies each patent or trademark and
copyright registration which has been issued to the Company or any Affiliate
of the Company with respect to any of its Intellectual Property, identifies
each pending patent application or application for registration which the
Company or any Affiliate of the Company has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which the Company or any Affiliate of the Company has granted to
any third party with respect to any of its Intellectual Property (together
with any exceptions). The Company has delivered to Buyer correct and complete
copies of all such patents, registrations, applications, licenses, agreements
and permissions (as amended to date). SCHEDULE 3.14(C) also identifies each
trade name or unregistered trademark used by the Company or any Affiliate of
the Company in connection with any of its businesses. With respect to each
item of Intellectual Property required to be identified in SCHEDULE 3.14(C):
(i) the Company possesses all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or other
restriction;
15
(ii) no royalty or other remuneration of any type is payable
with respect to any such item of Intellectual Property;
(iii) such item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(iv) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or threatened which challenges
the legality, validity, enforceability, use or ownership of such item; and
(v) the Company has never agreed to indemnify any Person for
or against any interference, infringement, misappropriation or other conflict
with respect to such item.
(d) SCHEDULE 3.14(D) identifies each item of Intellectual Property
that any third party owns and that the Company or any Affiliate of the Company
uses pursuant to license, sublicense, agreement or permission, other than
shrink-wrap licenses for personal computer software. The Company has delivered
to Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in SCHEDULE 3.14(D):
(i) the license, sublicense, agreement or permission
covering such item is legal, valid, binding, enforceable and in full force and
effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the Closing Date;
(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder;
(iv) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(v) no royalty or other remuneration of any type is payable
with respect to any such item of Intellectual Property;
(vi) with respect to each sublicense, the representations
and warranties set forth in items (i) through (iv) above are true and correct
with respect to the underlying license;
16
(vii) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling or
charge;
(viii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or threatened which challenges
the legality, validity or enforceability of the underlying item of
Intellectual Property; and
(ix) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
(e) Neither the Sole Stockholder nor any of the directors and
officers (nor any employees with responsibility for Intellectual Property
matters) of the Company have any Knowledge of any new products, inventions,
procedures or methods of manufacturing or processing that any competitors or
other third parties have developed which reasonably could be expected to
supersede or make obsolete any product or process of the Company.
SECTION 3.15 TANGIBLE ASSETS. SCHEDULE 3.15 lists all the tangible
Assets of the Company. Except as set forth on SCHEDULE 3.15, the Company owns
and has good and marketable title to all the tangible property and Assets
necessary for the conduct of its business as presently conducted and as
proposed to be conducted, including, but not limited to, those Assets listed
on SCHEDULE 3.15. The Company has no Knowledge of any defects in any of the
tangible Assets in accordance with normal industry practice, and the tangible
Assets are in good operating condition and repair. There are no Security
Interests on any of the Assets of the Company.
SECTION 3.16 INVENTORY. SCHEDULE 3.16 lists all the inventory
("Inventory") of the Company as of April 30, 1999. The Inventory of the
Company consists of raw materials and supplies, manufactured and purchased
parts, goods/work-in-process and finished goods, all of which is merchantable
and fit for the purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged or defective, subject only to the
reserve for inventory write-down set forth on the face of the Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company. There are no Security Interests on any of the Inventory of the
Company.
SECTION 3.17 CONTRACTS. SCHEDULE 3.17 lists the following Contracts and
other agreements to which the Company is a party as of the date hereof:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments of any
amount or for a term of more than one (1) year;
17
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products or other
personal property, or for the furnishing or receipt of services of any amount
or which has a term of any duration;
(c) any partnership or joint venture agreement;
(d) any agreement (or group of related agreements) under which it
has created, incurred, assumed or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in any amount, or under which it
has imposed a Security Interest on any of its Assets, tangible or intangible;
(e) any agreement concerning confidentiality or non-competition;
(f) any agreement with the Sole Stockholder or Affiliates of the
Sole Stockholder;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or
arrangement (including any Employee Benefit Plan) for the benefit of its
current or former directors, officers and employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis;
(j) any agreement under which the consequences of a default or
termination could have a Company Material Adverse Effect; or
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of Ten Thousand Dollars
($10,000.00).
The Company has delivered to Buyer a correct and complete copy of each
written agreement listed in SCHEDULE 3.17 and attached a written summary
setting forth the terms and conditions of each oral agreement referred to in
SCHEDULE 3.17. With respect to each such agreement, to the best knowledge of
the Company and the Sole Stockholder: (i) such agreement is legal, valid,
binding, enforceable and in full force and effect; (ii) such agreement will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (iii) no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under such agreement; and
(iv) no party has repudiated any provision of such agreement.
SECTION 3.18 NOTE RECEIVABLE AND ACCOUNTS RECEIVABLE. All notes
receivable and accounts receivable, other than those accounts receivable
transferred to the Sole Stockholder prior to Closing, as listed on SCHEDULE
18
1.2(B)(I) (collectively, "ACCOUNTS RECEIVABLE"), of the Company are reflected
properly on its books and records and, to the best Knowledge of the Company,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible and will be collected in accordance with their terms at their
recorded amounts. On the Closing Date, there are no Accounts Receivable due
from the Sole Stockholder or any of the Company's officers or directors.
SECTION 3.19 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
SECTION 3.20 INSURANCE. SCHEDULE 3.20 sets forth the following
information with respect to each current insurance policy (including policies
providing property, casualty, liability and workers' compensation coverage and
bond and surety arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder and the
name of each covered insured;
(c) the policy number, the period of coverage and the amount of
the annual premiums payable;
(d) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy and to the best Knowledge of the
Company and the Sole Stockholder: (i) such policy is legal, valid, binding,
enforceable and in full force and effect; (ii) such policy will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
(iii) neither the Company nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination,
modification, or acceleration, under such policy; and (iv) no party to the
policy has repudiated any provision thereof. The Company has been covered
during the past three (3) years by insurance in scope and amount customary and
reasonable for the business in which it has engaged during the aforementioned
period. SCHEDULE 3.20 also describes any self-insurance arrangements affecting
the Company.
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SECTION 3.21 EMPLOYEES. SCHEDULE 3.21 sets forth a true and complete
list of all employees of the Company, their respective positions, locations,
salaries or hourly wages and severance arrangements, each as of the date
hereof and as of the Closing Date. To the Knowledge of the Sole Stockholder
and the directors and officers (and employees with responsibility for
employment matters) of the Company, no executive, key employee or group of
employees has any plans to terminate employment with the Company. Except as
set forth in SCHEDULE 3.21, each employee of the Company is employed on an "at
will" basis and has no right to any material compensation following
termination of employment. Each employee of the Company has executed a
proprietary information and inventions agreement in the form provided to
counsel for Parent and Buyer. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. To the best Knowledge of the Company and the Sole Stockholder, the
Company has not committed any unfair labor practice. There is no
organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of the Company.
SECTION 3.22 EMPLOYEE BENEFITS.
(a) Except as set forth on SCHEDULE 3.22, with respect to all
employees, former employees, directors and independent contractors of the
Company and their dependents and beneficiaries, neither the Company nor any
ERISA Affiliate presently maintains, contributes to or has any Liability under
or with respect to any Employee Benefit Plan. The plans, programs and
arrangements set forth on SCHEDULE 3.22 are herein referred to as the "COMPANY
EMPLOYEE BENEFIT PLANS." Each Company Employee Benefit Plan (and each related
trust, insurance contract or other funding arrangement) complies in form and
in operation in all material respects with the applicable requirements of
ERISA, the Code, other applicable Laws and governing documents and agreements.
With respect to each Company Employee Benefit Plan, there has been no act or
omission by the Company or any ERISA Affiliate that would impair the right or
ability of the Company or any ERISA Affiliate to unilaterally amend in whole
or part or terminate such Company Employee Benefit Plan at any time, subject
to the terms of any insurance contract or other contractual arrangements with
third parties, and the Company has delivered to Buyer true and complete copies
of: (i) the plan documents, including any related trust agreements, insurance
contracts or other funding arrangements, or a written summary of the terms and
conditions of the plan if there is no written plan document; (ii) the most
recent IRS Form 5500; (iii) the most recent financial statement and, if
applicable, actuarial valuation; (iv) all correspondence with the Internal
Revenue Service, the Department of Labor and other governmental agencies with
respect to the past three (3) plan years other than IRS Form 5500 filings; and
(v) the most recent summary plan description.
(b) Neither the Company nor any of its directors, officers or
employees has any Liability with respect to any Company Employee Benefit Plan
for failure to comply with ERISA, the Code, any other applicable Laws or any
governing documents or agreements.
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(c) No Company Employee Benefit Plan is an Employee Pension
Benefit Plan, and no Company Employee Benefit Plan has any unfunded Liability.
With respect to the Company Employee Benefit Plans, all applicable
contributions and premium payments for all periods ending prior to the Closing
Date (including periods from the first day of the then current plan year to
the Closing Date) shall be made prior to the Closing Date in accordance with
past practice.
(d) Neither the Company nor any ERISA Affiliate maintains,
maintained, contributes to, or has any Liability (including, but not limited
to, current or potential withdrawal Liability) with respect to any
Multiemployer Plan or Employee Pension Benefit Plan.
(e) With respect to all employees and former employees of the
Company, neither the Company nor any ERISA Affiliate presently maintains,
contributes to or has any Liability under any funded or unfunded medical,
health or life insurance plan or arrangement for present or future retirees or
present or future terminated employees except as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or state continuation
coverage laws. There has been no act or acts which would result in a
disallowance of a deduction or the imposition of a tax pursuant to Section
4980B, or any predecessor provision, of the Code or any related regulations.
No event has occurred with respect to which the Company or any Affiliates
could be liable for a material Tax imposed by any of Sections 4972, 4976,
4977, 4979 or 4980 of the Code, or for a material civil penalty under Section
502(c) of ERISA.
(f) There is no pending, or to the Knowledge of the Company,
threatened legal action, proceeding, audit, examination or investigation
against or involving any Company Employee Benefit Plan maintained by the
Company or any ERISA Affiliate (other than routine claims for benefits). To
the Knowledge of the Company, there is no basis for, and there are no facts
which could give rise to, any such condition, legal action, proceeding or
investigation. Any bonding required with respect to any Company Employee
Benefit Plans in accordance with applicable provisions of ERISA has been
obtained and is in full force and effect.
SECTION 3.23 GUARANTIES. The Company is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person.
SECTION 3.24 ENVIRONMENT, HEALTH AND SAFETY.
(a) Except as set forth on SCHEDULE 3.24, the Company has complied
with all Environmental, Health and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against the Company alleging any failure so to
comply. Without limiting the generality of the preceding sentence, the Company
has obtained and been in compliance with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health and Safety Laws. The Company has
provided Buyer with correct and complete copies of all reports and studies
21
within the possession or control of the Company or the Sole Stockholder with
respect to past or present environmental conditions or events at any real
property presently or previously owned or leased by the Company.
(b) Except as set forth on SCHEDULE 3.24, the Company has no
Liability (and the Company has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Company giving rise to any Liability) for damage to any
site, location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any reason
under any Environmental, Health and Safety Law.
(c) Except as set forth on SCHEDULE 3.24, all properties owned
(previously or currently) or leased and equipment used in the business of the
Company, and its predecessors and Affiliates, have been free of asbestos,
PCB's, underground storage tanks, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, polychlorinated biphenyls,
landfills, surface impoundments, disposal areas and Extremely Hazardous
Substances.
SECTION 3.25 CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Except as
described in SCHEDULE 3.25, neither the Sole Stockholder nor any Affiliates of
the Sole Stockholder have been involved in any business arrangement or
relationship with the Company within the past twelve (12) months (other than
employment by the Company), and neither the Sole Stockholder nor any
Affiliates of the Sole Stockholder own any Asset which is used in the business
of the Company.
SECTION 3.26 DELIVERY OF INFORMATION. The Sole Stockholder acknowledges
the receipt and review by the Sole Stockholder of the most recent filings made
by Parent with the SEC under the Securities Act and the Exchange Act.
SECTION 3.27 PRODUCT AND SERVICE WARRANTIES. To the best Knowledge of
the Company and the Sole Stockholder, each product sold, leased or delivered,
and each service performed, by the Company has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
the Company has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against any of them giving rise to any Liability) for the replacement
or repair of any product, the substandard performance of any service, or other
damages in connection with the product sold or services provided by the
Company, subject only to the reserve for product and service warranty claims
set forth on the face of the Balance Sheet (rather than in any notes thereto)
as adjusted for the passage of time through the Closing Date in accordance
with the past custom and practice of the Company. No product sold, leased or
delivered, or service performed, by the Company is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and
conditions of sale, lease or performance. SCHEDULE 3.27 includes copies of the
22
standard terms and conditions of sale, lease or performance for the Company
(containing applicable guaranty, warranty and indemnity provisions).
SECTION 3.28 PRODUCT AND SERVICE LIABILITY. To the best Knowledge of the
Company and the Sole Stockholder, the Company has no Liability (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any Liability) arising out of any injury or damages (whether actual or
alleged) to any Person or its property or its business operations or prospects
as a result of the ownership, possession or use of (i) any product sold,
leased or delivered by the Company or (ii) any service performed by the
Company.
SECTION 3.29 CERTAIN BUSINESS PRACTICES. Neither the Company nor any
director, manager, officer, stockholder, agent or employee of the Company has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
SECTION 3.30 DISCLOSURE. No representation or warranty made by the
Company or the Sole Stockholder, nor any document, written information,
statement, financial statement, certificate, schedule or exhibit prepared and
furnished or to be prepared and furnished by the Company or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make the statements of facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
SECTION 3.31 LIMITATION ON REPRESENTATIONS AND WARRANTIES. Neither the
Company nor the Sole Stockholder makes any representation or warranty to the
Buyer or Parent regarding the probable success or profitability of the Company
after the Closing Date.
ARTICLE IIIA
REPRESENTATIONS AND WARRANTIES OF SOLE STOCKHOLDER
Sole Stockholder hereby represents and warrants to Parent and Buyer as
follows:
SECTION 3.1A AUTHORIZATION OF TRANSACTION. The Sole Stockholder has full
power and authority to execute and deliver this Agreement and to perform all
obligations hereunder and thereunder required to be performed by the Sole
Stockholder. This Agreement constitutes the valid and legally binding
obligation of the Sole Stockholder, enforceable in accordance with its terms
and conditions. The Sole Stockholder is a natural person over 21 years of age.
The Sole Stockholder has not had a legal representative appointed by a court
of law or otherwise to act in behalf of the Sole Stockholder or with respect
23
to any property of the Sole Stockholder. The Sole Stockholder is not required
to give any notice to, make any filing with, or obtain any authorization,
consent or approval of any Governmental Entity in order to consummate the
transactions contemplated by this Agreement.
SECTION 3.2A NON-CONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby and thereby, will (a) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
of any government, Governmental Entity, or court to which the Sole Stockholder
is subject or (b) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
the Sole Stockholder is a party, by which the Sole Stockholder is bound or to
which any Assets of the Sole Stockholder are subject.
SECTION 3.3A BROKERS' FEES. Except as set forth on SCHEDULE 3.11, Sole
Stockholder has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.
SECTION 3.4A COMPANY SHARES. Sole Stockholder holds of record and own
beneficially all the outstanding shares of Company Common Stock, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Encumbrances, Security Interests,
options, warrants, purchase rights, contracts, commitments and/or other rights
whatsoever. The Sole Stockholder is not a party to any option, warrant,
purchase right or other contract or commitment whatsoever that could require
the Sole Stockholder to sell, transfer or otherwise dispose of any capital
stock of the Company (other than this Agreement). Sole Stockholder is not a
party to any voting trust, proxy, voting rights agreement or other agreement
or understanding with respect to the voting of any capital stock of the
Company.
SECTION 3.5A ACCREDITED INVESTOR. Sole Stockholder is an "accredited
investor" as that term is defined in Regulation D of the Securities Act and is
sufficiently knowledgeable and experienced in financial and business matters
that the Sole Stockholder is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement and making an informed business
decision.
SECTION 3.6A INVESTMENT REPRESENTATIONS. With respect to the AIM Common
Stock being issued to the Sole Stockholder as part of the Purchase Price
pursuant to the Escrow Agreement attached as EXHIBIT A, the Sole Stockholder
represents and warrants to the Buyer and Parent as follows:
(i) EXPERIENCE. The Sole Stockholder is capable of evaluating the
merits and risks of this investment, has the capacity to protect his own
respective interests, and has the financial ability to bear the economic risks
of the investment.
24
(ii) INVESTMENT. The Sole Stockholder is acquiring the AIM Common
Stock for investment for his own account and not as a nominee or agent, and
not with a view to, or for resale in connection with, any distribution
thereof. The Sole Stockholder understands that the AIM Common Stock to be
delivered has not been and may not be registered under the Securities Act of
1933 (the "Securities Act") by reason of an exemption from the registration
provisions of the Securities Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of their representations as contained herein. The Sole Stockholder is
domiciled in the State of Florida.
(iii) HOLDING PERIOD. The Sole Stockholder acknowledges that the
AIM Common Stock may not be sold in the absence of an effective registration
statement under the Securities Act or unless an exemption from such
registration is available.
(iv) ACCESS TO INFORMATION. The Sole Stockholder has had an
unlimited opportunity to discuss Parent's business, management and financial
affairs with its management and the opportunity to review in detail Parent's
publicly available information related to the Sole Stockholder's investment in
Parent. The Sole Stockholder's questions pertaining to Parent were answered
fully and to the Sole Stockholder's satisfaction.
(v) SECURITIES ADMINISTRATORS. The Sole Stockholder understands
that no securities administrator of any state has made any finding or
determination relating to the fairness of the investment and that no
securities administrator of any state has or will recommend or endorse the
purchase of the AIM Common Stock.
(vi) TRANSFER AND LEGEND. The AIM Common Stock shall not be sold,
pledged, hypothecated or otherwise transferred unless it is registered under
the Securities Act and applicable state securities laws or is exempt
therefrom. The Sole Stockholder acknowledges that the certificate representing
the AIM Common Stock shall be endorsed with a legend which provides
substantially as follows:
The securities evidenced hereby have not been registered
under the Securities Act of 1933, or the laws of any other
jurisdiction, and may not be sold, transferred, assigned,
pledged or otherwise distributed unless there is an
effective registration statement under such Act and
applicable securities laws covering such securities or AIM
Group, Inc. receives an opinion of counsel for the holder of
the securities (concurred in by counsel for AIM Group, Inc.)
stating that such sale, transfer, assignment, pledge or
distribution is exempt from the registration and prospectus
delivery requirements of such Act and applicable securities
laws.
25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer hereby represent and warrant, jointly and severally, to
the Company and the Sole Stockholder that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and each of Parent and
Buyer is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
except for such failures to be so qualified or licensed and in good standing
as would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
SECTION 4.2 AUTHORITY. Each of Parent and Buyer has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceeding
on the part of Parent or Buyer is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Buyer and, assuming the due
authorization, execution and delivery thereof by the Sole Stockholder and the
Company, constitutes the legal, valid and binding obligations of Parent and
Buyer enforceable in accordance with its terms.
SECTION 4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and
Buyer do not, and the performance of this Agreement by Parent and Buyer will
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws
of Parent or Buyer, (ii) conflict with or violate any Laws in effect as of the
date of this Agreement applicable to Parent or Buyer or by which any of their
respective properties is bound, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on, any of the properties or Assets of
Parent or Buyer pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Buyer is a party or by which Parent or Buyer or any of
their respective properties is bound by or subject to, except for breaches,
defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or Liens or Encumbrances that would not have
a Parent Material Adverse Effect.
26
(b) The execution and delivery of this Agreement by Parent and
Buyer do not, and the performance of this Agreement by Parent and Buyer will
not, require Parent or Buyer to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entities, except (i) for applicable requirements, if any, of the Securities
Act and the Exchange Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not, either individually or in the aggregate, prevent
Parent or Buyer from performing its obligations under this Agreement.
SECTION 4.4 LIMITATION ON REPRESENTATIONS AND WARRANTIES.
(a) Neither Parent nor Buyer makes any other representation or
warranty to the Company or the Sole Stockholder, or any of the Company's or
the Sole Stockholder's employees, agents, consultants or representatives
except as expressly provided in this Agreement.
(b) Neither Parent nor Buyer make any representation or warranty
to the Company or the Sole Stockholder regarding the probable success or
profitability of Buyer or Parent.
SECTION 4.5 REPORTS; FINANCIAL STATEMENTS.
(a) Parent is current in all forms, reports, statements and other
documents required to be filed with the SEC (collectively, the "PARENT SEC
REPORTS"). The Parent SEC Reports, including all Parent SEC Reports filed
after the date of this Agreement and prior to the Closing Date, were or will
be prepared in all material respects in accordance with the requirements of
applicable Law (including, the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Parent SEC Reports). As of their respective dates, the Parent SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the Parent SEC Reports filed prior to, on
or after the date of this Agreement (i) have been or will be prepared in
accordance with, and complied or will comply as to form with, the published
rules and regulations of the SEC and GAAP applied on a consistent basis
throughout the periods involved (except as otherwise noted therein) and (ii)
fairly present or will fairly present the financial position of Parent as of
the respective dates thereof and the results of its operations and cash flows
for the periods indicated, except that any unaudited interim financial
statements were or will be subject to normal and recurring year-end
adjustments.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as and to the
extent disclosed in the Parent SEC Reports filed prior to the date of this
Agreement or as contemplated in this Agreement, since the end of the calendar
27
period for which Parent filed its most recent Parent SEC Report, there has not
been (a) a Parent Material Adverse Effect or (b) any significant change by
Parent in its accounting methods, principles or practices.
SECTION 4.7 OWNERSHIP OF BUYER. All of the outstanding capital stock of
Buyer is owned directly by Parent.
SECTION 4.8 BROKERS. Parent and Buyer have engaged a broker in
connection with this and other transactions. To the extent there is any fee
for the services of the broker retained by Parent and Buyer in connection with
the transactions contemplated by this Agreement, Parent and Buyer shall be
solely responsible for any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Closing Date, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will: (a) operate only in the Ordinary Course of Business; and (b)
use its best efforts to (1) preserve and/or maintain, in all material respects
and consistent with past custom and practice, its business and properties,
including its present operations, physical facilities, working conditions and
relationships with its present employees and Persons having significant
business relations with it, including, without limitation, suppliers and
customers, (2) maintain and keep its properties and Assets in as good repair
and condition as at present, ordinary wear and tear excepted, (3) keep in full
force and effect insurance and bonds comparable in amount and scope of
coverage to that currently maintained, and (4) at the request of Parent or
Buyer, obtain pre-clearance certificates and file such instruments and
documents as are necessary to permit Buyer to merge the Company with and into
the Buyer on the Closing Date or immediately following the Closing Date.
SECTION 5.2 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or as previously disclosed to Buyer or Parent
in writing on SCHEDULE 5.2, or otherwise consented to in writing by Buyer or
Parent, from the date of this Agreement until the Closing Date, the Company
shall not, directly or indirectly through any Affiliate or otherwise (and the
Sole Stockholder shall not and shall not cause the Company to), and shall not
permit any Affiliate to directly or indirectly, do any of the following:
(a) (i) increase the compensation payable to, or to become payable
to, any employee, director or executive officer; (ii) grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or employee; (iii) establish, adopt, enter into, amend,
modify or terminate any Employee Benefit Plan or arrangement except as may be
required by applicable Law; or (iv) hire any person other than persons to
replace existing employees who cease to be employed with the Company prior to
28
the Closing, with such replacement persons being hired at the same total cost
and salary as the former whom they are replacing;
(b) declare or pay any dividend on or make any other distribution
in respect of, outstanding shares of its capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its
capital stock, or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock, or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital
stock, or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of
any Security Interests, Liens, claims, pledges, limitations in voting rights,
charges or other Encumbrances) of, any shares of any class of its capital
stock (including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any other shares, or any rights, warrants or
options to acquire, any such shares; and (ii) amend or otherwise modify the
terms of any such rights, warrants or options the effect of which shall be to
make such terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in, all or a portion of the Assets of, or by
any other manner, any corporation, partnership, association or other business,
organization or division thereof, or otherwise acquire or agree to acquire any
Assets of any other Person (other than the purchase of Assets from suppliers
or vendors in the Ordinary Course of Business) which are material,
individually or in the aggregate, to the Company;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, any of its material Assets;
(g) propose or adopt any amendments to its Certificate of
Incorporation or its By-Laws or equivalent organizational documents;
(h) (i) change any of its methods of accounting in effect on the
date of the Balance Sheet, or (ii) make or rescind any material election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, or change in any material respect any of its methods of reporting
income or deductions for federal income tax purposes from those employed in
the preparation of the federal income Tax Return for the taxable year ended
December 31, 1997, except, in the case of clause (i) or clause (ii), as may be
required by Law or GAAP;
(i) enter into any Contract outside the Ordinary Course of
Business;
29
(j) create, or permit the creation of, any Lien upon any Assets
outside the Ordinary Course of Business;
(k) enter into any employment Contract or collective bargaining
agreement, or modify the terms of any existing such Contract or agreement;
(l) sell, lease, transfer or assign any Assets;
(m) make any capital expenditures other than in the Ordinary
Course of Business, or make any capital expenditures which in the aggregate
exceed Five Thousand Dollars ($5,000.00), unless the Company has received the
prior written consent of the Buyer;
(n) amend or renew, or enter into any Contract involving
operations outside of the United States; or
(o) take or agree to take any action that would or is reasonably
likely to result in any representations and warranties of the Company or the
Sole Stockholder set forth in this Agreement being untrue or in any of the
conditions to the Merger not being satisfied.
SECTION 5.3 NEGATIVE COVENANTS OF PARENT AND BUYER. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Company, from the date of this Agreement until the Closing Date, Parent and
Buyer will not take or agree to take any action that would or is reasonably
likely to result in any representations and warranties of Parent or Buyer set
forth in this Agreement being untrue or in any of the conditions to the Merger
not being satisfied.
SECTION 5.4 ACCESS AND INFORMATION. The Company shall (i) provide
Parent, Buyer and their officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives
(collectively, the "PARENT REPRESENTATIVES"), with full access, upon
reasonable prior notice, to all officers, employees and accountants of the
Company and to their assets, properties, Contracts, books, records and all
such other information and data concerning the business and operations of the
Company as Parent, Buyer or any of the Parent Representatives reasonably may
request in connection with such investigation. Such investigation will
involve, among other things, Parent's or Buyer's review and confirmation of
the Company's Financial Statements, the legal review of the Company's
Contracts and leases, the review of the Company's patient, client and referral
lists and reference checks of the Company. Parent will provide the Sole
Stockholder with all information reasonably requested by the Sole Stockholder
to enable the Sole Stockholder to evaluate the merits of the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
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SECTION 6.1 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company, Parent and Buyer shall each use its best efforts
to: (i) take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the transactions contemplated by
this Agreement; (ii) obtain from any Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by Parent, Buyer or the Company in connection with the
authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated herein, including, without limitation,
theMerger; (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement required under the
federal securities laws and the rules and regulations thereunder, if any, and
any other applicable federal or state securities laws, and (B) any other
applicable Law; provided that Parent, Buyer and the Company shall cooperate
with each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its
advisors prior to filing and, if requested, accepting all reasonable
additions, deletions or changes suggested in connection therewith. The
Company, Parent and Buyer shall furnish all information required for any
application or other filing to be made pursuant to the rules and regulations
of any applicable Law in connection with the transactions contemplated by this
Agreement.
(b) (i) Each of the Company, Parent and Buyer shall give any
notices to third parties, and use its best efforts to obtain any third party
consents (A) necessary, proper or advisable to consummate the transactions
contemplated in this Agreement, (B) disclosed or required to be disclosed in
the schedules contained herein, (C) otherwise required under any Contracts,
licenses, leases or other agreements in connection with the consummation of
the transactions contemplated herein or (D) required to prevent a Company
Material Adverse Effect from occurring prior to or after the Closing Date or a
Parent Material Adverse Effect from occurring prior to or after the Closing
Date.
(ii) In the event that any party shall fail to obtain any
third party consent described in subsection (b) (i) above, such party shall
use its best efforts, and shall take any such actions reasonably requested by
the other party hereto, to minimize any adverse effect upon the Company,
Parent and Buyer and their respective businesses resulting, or which could
reasonably be expected to result after the Closing Date, from the failure to
obtain such consent.
SECTION 6.2 TRANSFER OF COMPANY LIABILITIES PRIOR TO THE CLOSING DATE.
The Company and the Sole Stockholder shall do all acts necessary to transfer,
distribute and/or dispose of all long-term Liabilities of the Company
reflected on the Balance Sheet and any long-term Liabilities arising after the
date of the Balance Sheet up to and through the Closing Date (other than those
Liabilities reflected on Schedule 3.8) to the Sole Stockholder, and the Sole
Stockholder shall assume such Liabilities all with the effect that such
Liabilities shall not be owned by the Company, nor assumed by Buyer, at the
Closing Date. Any Taxes generated in connection with such transfers,
distributions or disposals shall be borne by the Sole Stockholder or shall be
reimbursed to the Buyer by the Sole Stockholder.
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SECTION 6.3 PAYMENT BY COMPANY OF CERTAIN OUTSTANDING OBLIGATIONS PRIOR
TO THE CLOSING DATE. Prior to the Closing Date, the Company and the Sole
Stockholder shall do all acts necessary to cause the Company to fully pay all
outstanding pension plan and profit sharing contributions due from the
Company, if any, and the Company shall terminate all such plans on or prior to
the Closing Date.
SECTION 6.4 EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Prior to the
Closing Date, the Sole Stockholder shall do all acts necessary (i) to cause
the Sole Stockholder, ▇▇▇▇▇▇ Roswell, Sr. and all employees of the Company
designated by Parent or the Buyer to execute the form of Employment and
Non-Competition Agreements attached hereto as EXHIBITS ▇-▇, ▇-▇ and B-3 and to
deliver all such fully-executed Employment and Non-Competition Agreements to
Parent and Buyer prior to the Closing Date; and (ii) to cause the Sole
Stockholder to also execute the Non-Competition Agreement attached hereto as
EXHIBIT C, and deliver such fully-executed Non-Competition Agreement to Parent
and Buyer prior to the Closing Date.
SECTION 6.5 LANDLORD APPROVALS. Prior to the Closing Date, the Company
and the Sole Stockholder shall do all acts necessary to cause the landlord
with respect to the following leased locations to issue its written consent,
if necessary, to the change in the tenant from the Company to the Buyer
without any charge or cost and without any material change in the terms of the
applicable lease or other arrangement previously existing between such party
and the Company or the Sole Stockholder, with such transferred lease and
landlord approval to such transfer being attached hereto as EXHIBIT F: (1) ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 6.6 CONTRACT ASSIGNMENTS/NOVATIONS. Prior to the Closing Date or
such reasonable time after the Closing Date as may be required, the Company
and Sole Stockholder agree to use their best efforts do all acts reasonably
necessary to cause all parties to all material contracts with the Company to
issue their written consent, if necessary, to the assignment and novation of
all such contracts from the Company to the Buyer without any charge or cost
and without any material change in the terms of the applicable contract or
other arrangement previously existing between such party and the Company or
Sole Stockholder, with such consents to be set forth on Schedule 7.2(c)
hereto.
SECTION 6.7 BEST EFFORTS. The parties hereto shall use their best
efforts to consummate the Merger and the other transactions contemplated
hereby as promptly as practicable.
SECTION 6.8 PUBLIC ANNOUNCEMENTS. The parties hereto agree that only
Parent may make any public announcement of the existence of this Agreement
and/or the transactions contemplated hereby, including but not limited to the
Merger.
SECTION 6.9 TAIL INSURANCE. The Sole Stockholder shall purchase, at the
sole cost and expense of the Sole Stockholder, a Discontinued Products and
Operations Coverage liability insurance policy to cover the three (3) year
32
period immediately following the Closing Date, with such policy to provide for
the same insurance coverage as the Company's existing liability policies, but
at no less than One Million Dollars ($1,000,000.00) of insurance coverage per
occurrence and Three Million Dollars ($3,000,000.00) of insurance coverage in
the aggregate, and with evidence of such Discontinued Products and Operations
Coverage liability insurance to be attached hereto as SCHEDULE 6.9.
SECTION 6.10 NO COMPETING TRANSACTIONS. The Sole Stockholder and/or the
Company shall not have engaged in any Competing Transaction since the
execution of any letter of intent or memorandum of understanding relating to
the transactions contemplated by this Agreement or from and after the date on
which the first draft of this Agreement was delivered to counsel for the
Company, whichever is earlier. The Company and the Sole Stockholder agree that
they shall not, individually or in the aggregate, engage in or conduct any
discussions relating to any Competing Transaction.
SECTION 6.11 [Intentionally Deleted]
SECTION 6.12 ADDITIONAL TAX MATTERS.
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
(i) Sole Stockholder shall prepare or cause to be prepared
and file or cause to be filed, at Sole Stockholder's cost and expense, all Tax
Returns for the Company (including, without limitation, the Company's final
federal Form 1120, U.S. Income Tax Return, or final federal Form 1120S, U.S.
Income Tax Return for an S Corporation, as the case may be, and any related
state income Tax Return) for all periods ending on or prior to the Closing
Date which are filed after the Closing Date, including but not limited to the
preparation and filing of the final Tax Returns for the Company for the fiscal
year or portion thereof in which the Closing occurs ("FINAL TAX RETURN") on or
before the fifteenth (15th) day of the third month, or the fifteenth (15th)
day of the fourth (4th) month for an S Corporation, after Closing and deliver
or cause to be delivered on that same date the Final Tax Return and financial
statements for the time period covered by the Final Tax Return, as well as the
Tax Return for the full year immediately preceding the period covered by the
Final Tax Return and financial statements for that immediately preceding full
year, to the following person: ▇▇▇▇▇ ▇▇▇▇▇▇, AIM Group, Inc., ▇.▇. ▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Sole Stockholder shall permit
Buyer to review and comment on each such Tax Return (including but not limited
to the Final Tax Return) described in the preceding sentence prior to filing .
To the extent required by applicable law, the Sole Stockholder shall include
any income, gain, loss, deduction or other tax items for such periods on the
Sole Stockholder's Tax Return(s) in a manner consistent with the Schedule
K-1(s) relating to such income Tax Return(s) for such periods. The Sole
Stockholder shall be solely liable for, shall pay and shall indemnify Buyer
from, any Taxes of the Company with respect to such periods.
(ii) The Buyer shall prepare or cause to be prepared and
file or cause to be filed, at Buyer's cost and expense, any Tax Returns for
the Company for all periods beginning on or after the Closing Date, including,
33
without limitation, the final income Tax Returns, if any, of the Company that
may be required to be filed after the Closing but prior to the merger or
liquidation of the Company into the Buyer.
(b) COOPERATION ON TAX MATTERS.
(i) Buyer, the Company and the Sole Stockholder shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 6.12 and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request)
the provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company and the Sole Stockholder agree to
provide Buyer upon Closing with all books and records with respect to Tax
matters pertinent to the Company relating to any taxable period before Closing
(including any extensions thereof) as to which the statute of limitations has
not expired and warrant that no such books and records have been transferred,
destroyed or discarded and that the Company and the Sole Stockholder have
abided by all record retention agreements, if any, entered into with any
taxing authority.
(ii) Buyer and the Sole Stockholder further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
SECTION 6.13 REGISTRATION RIGHTS AGREEMENT. Parent and the Sole
Stockholder shall enter into a registration rights agreement substantially in
the form attached hereto as Exhibit G (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Sole Stockholder will receive certain rights to register
his shares of AIM Common Stock in accordance with the terms of such agreement.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Merger and
the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable Law:
(a) NO ORDER. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
34
other order (whether temporary, preliminary or permanent) which is in effect
and which has the effect of making the Merger illegal or otherwise prohibiting
consummation of theMerger.
(b) CONSENTS AND APPROVALS. All material consents, approvals and
authorizations legally required to be obtained to consummate the Merger shall
have been obtained from all required Governmental Entities.
(c) COMPLETION OF PARENT'S PRIVATE EQUITY OFFERING. Parent and
Buyer shall have completed their private equity offering by July 31, 1999,
which private equity offering shall have raised a minimum of at least Three
Million Five Hundred Thousand Dollars ($3,500,000.00).
(d) Requisite APPROVALS. The transactions contemplated by this
Agreement, and the Exhibits hereto, shall have been duly approved by the Board
of Directors of the Parent and any regulatory authority having jurisdiction
over the Parent.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER AND/OR PARENT.
The obligations of Parent and Buyer to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions,
each of which may be waived, in whole or in part, to the extent permitted by
applicable Law, by Parent or Buyer:
(a) REPRESENTATIONS AND WARRANTIES.
(i) Each of the representations and warranties of the
Company contained in this Agreement shall be true and correct when made and on
and as of the Closing Date, as if made on and as of such date, individually or
in the aggregate, and except that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
of such date. Parent or Buyer shall have received a certificate of the
President of the Company to such effect; and
(ii) Each of the representations and warranties of the Sole
Stockholder contained in this Agreement shall be true and correct when made
and on and as of the Closing Date, as if made on and as of such date, except
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date. Parent or Buyer shall have received a certificate of the
President or Chief Financial Officer of the Company to that effect.
35
(c) THIRD PARTY CONSENTS AND WAIVERS. The Company shall have
obtained consents and waivers, in form and substance reasonably satisfactory
to Parent or Buyer, in respect of the contracts or agreements set forth on
SCHEDULE 7.2(C).
(d) COMPANY MATERIAL ADVERSE EFFECT. The Company shall not have
become subject to any action or event which resulted in or may likely result
in a Company Material Adverse Effect.
(e) LEGAL OPINION. Parent or Buyer shall have received the legal
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel for the Company and the Sole
Stockholder, covering the matters set forth on EXHIBIT D hereto.
(f) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The Sole
Stockholder, ▇▇▇▇▇▇ Roswell, Sr. and such other employees of the Company as
shall be identified by Parent and the Buyer shall execute employment and
non-competition agreements (collectively, the "EMPLOYMENT AGREEMENTS") in the
forms attached hereto as EXHIBITS ▇-▇, ▇-▇ and B-3, respectively.
(g) NON-COMPETITION AGREEMENT. The Sole Stockholder shall execute
and deliver to Parent and Buyer a non-competition agreement in the form
attached hereto as EXHIBIT C.
(h) UCC FORMS. The Company and the Sole Stockholder shall execute
and deliver to Parent and Buyer such UCC forms as may be necessary in the
opinion of the counsel for Parent and Buyer to evidence that all the Assets of
the Company are free and clear of any Liens.
(i) TAIL INSURANCE. Sole Stockholder shall deliver to Parent and
Buyer evidence of the purchase by Sole Stockholder, at the sole cost and
expense of Sole Stockholder of a Discontinued Products and Operations Coverage
liability insurance policy to cover the three (3) year period immediately
following the Closing Date, with such policy to provide for the same insurance
coverage as the Company's existing liability policies, but at no less than One
Million Dollars ($1,000,000.00) of insurance coverage per occurrence and Three
Million Dollars ($3,000,000.00) of insurance coverage in the aggregate, and
with evidence of such Discontinued Products and Operations Coverage liability
insurance policy to be attached hereto as Schedule 6.9.
(j) STOCK CERTIFICATE OF ▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The Escrow Agent shall
have received a stock certificate from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ representing 100 shares
of Company Common Stock, pursuant to the Stock Purchase Agreement between the
Sole Stockholder and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(k) REGISTRATION RIGHTS AGREEMENT. The Sole Stockholder shall
execute and deliver to Parent the Registration Rights Agreement in the form
attached hereto as Exhibit G.
36
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
SOLE STOCKHOLDER. The obligations of the Company and/or the Sole Stockholder
to effect the Merger and the other transactions contemplated in this Agreement
are subject to the following conditions, each of which may be waived, in whole
or in part, to the extent permitted by applicable Law, by the Company or the
Sole Stockholder on behalf of both such parties:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Parent and Buyer contained in this Agreement shall be true
and correct when made and on and as of the Closing Date as if made on and as
of such date, except where the failure to be so true and correct would not
have a Parent Material Adverse Effect, and except that those representations
and warranties which address matters only as of a particular date shall remain
true and correct as of such date, except where the failure to be so true and
correct would not have a Parent Material Adverse Effect. Solely for purposes
of this section and in determining compliance with the conditions set forth
herein, any representation and warranty made by Parent in this Agreement shall
be read and interpreted as if the qualification stated therein with respect to
materiality or Parent Material Adverse Effect were not contained therein. The
Company shall have received a certificate of the President of Parent to such
effect.
(b) AGREEMENTS AND COVENANTS. Parent and Buyer shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it or
them on or prior to the Closing Date. The Company shall have received a
certificate of the President of Parent to that effect.
(c) PARENT MATERIAL ADVERSE EFFECT. Parent shall not have become
subject to any action or event which resulted in or may likely result in a
Parent Material Adverse Effect.
(d) LEGAL OPINION. The Company shall have received the legal
opinion of Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to Parent and the Buyer,
covering the matters set forth on EXHIBIT E.
(e) NOMINATION OF SOLE STOCKHOLDER FOR PARENT'S BOARD OF
DIRECTORS. At the the Closing, the Sole Stockholder will be elected to the
Board of Directors of the Parent. At the first annual meeting of the
shareholders of the Parent after the Closing Date, the Parent will use its
best efforts to cause the Sole Stockholder to be nominated to serve on the
Parent's Board of Directors.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND INDEMNIFICATION
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
37
(a) by mutual consent of Parent or Buyer and the Company;
(b) by Parent or Buyer, upon a material breach of any covenant or
agreement on the part of the Company or the Sole Stockholder as set forth in
this Agreement;
(c) by the Company, upon a material breach of any covenant or
agreement on the part of Parent or Buyer as set forth in this Agreement;
(d) by either Parent, Buyer or the Company, if there shall be any
order of a Governmental Entity which is final and non-appealable preventing
the consummation of theMerger;
(e) by Parent or Buyer if Parent or Buyer is not satisfied with
the results of its continuing due diligence review regarding the Company;
(f) by either Parent, Buyer or the Company, if the Closing shall
not have occurred on or before July 31, 1999 (unless the failure to consummate
the Merger by such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement).
SECTION 8.2 INVESTIGATION. Notwithstanding any of the foregoing, the
right of any party hereto to terminate this Agreement pursuant to Section 8.1
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party hereto, any Person controlling
any such party or any of their respective officers or directors, whether prior
to or after the execution of this Agreement.
SECTION 8.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 8.4 WAIVER. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby.
SECTION 8.5 FEES, EXPENSES AND OTHER PAYMENTS. Parent, Buyer, the
Company and the Sole Stockholder each shall bear its and their own respective
costs and expenses which are incurred in connection with the preparation,
negotiation and performance of this Agreement (including any prior memorandum
of understanding or letter of intent relating hereto) and the transactions
contemplated hereby, including all due diligence expenses and fees and
expenses of agents, representatives, counsel and accountants.
SECTION 8.6 INDEMNIFICATION.
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(a) The Sole Stockholder shall indemnify and defend each of Parent
and the Buyer, and hold them harmless, from and against any and all losses,
damages, Liabilities, claims, demands, judgments, settlements, costs and
expenses of any nature whatsoever (including reasonable attorneys' fees)
(collectively, "LOSS"), resulting from or arising out of any: (i) material
breach of any representation or warranty or agreement of the Company or the
Sole Stockholder contained herein; or (ii) Liability of the Company, whether
or not addressed by a representation or warranty, which was created, incurred
or arose from facts, events, conditions or circumstances existing on or before
the Closing Date, to the extent that, but only to the extent that, such
Liability was not reflected or reserved against on the face of the Balance
Sheet (including any notes thereto) as adjusted for Liabilities incurred in
the Ordinary Course of Business since the date of the Balance Sheet (provided
that the items listed on SCHEDULE 3.8 shall be deemed to be incurred in the
Ordinary Course of Business unless otherwise objected to by Parent or Buyer
prior to the Closing Date). No claim for indemnification pursuant to this
Section 8.6(a) may be made subsequent to the date two (2) years after the
Closing Date or in respect of a Loss for which Parent or Buyer has otherwise
been previously reimbursed by the Sole Stockholder, PROVIDED, HOWEVER, that no
such expiration period shall apply to any Loss or Liability arising out of any
agreement, or breach thereof, between the Sole Stockholder and/or the Company
and any former stockholder of the Company. Without limiting any other rights
of Parent or Buyer, any such Loss may be deducted by Parent or Buyer from the
outstanding principal amount of the Note portion of the Purchase Price
consideration and (i) prior to the matter being adjudicated or settled
pursuant to this Section 8.6, the amount so deducted from the Note shall be
held in an escrow account for the benefit of the prevailing party and (ii)
subsequent to the matter being adjudicated or settled pursuant to this Section
8.6, the amount so deducted from the Note shall be paid to the prevailing
party.
(b) (i) If any third party shall notify Parent or Buyer with
respect to any third party claim (a "THIRD PARTY CLAIM") that may give rise to
a Loss, then Parent or Buyer shall promptly notify the Sole Stockholder
thereof in writing; PROVIDED, HOWEVER, that no delay on the part of Parent or
Buyer in notifying the Sole Stockholder shall relieve the Sole Stockholder
from any obligation hereunder unless (and then solely to the extent) the Sole
Stockholder is prejudiced by such delay
(ii) The Sole Stockholder will have the right to defend
Parent and Buyer against the Third Party Claim with counsel selected by Sole
Stockholder and reasonably satisfactory to Parent or Buyer, so long as: (A)
the Sole Stockholder so notify Parent and Buyer in writing within fifteen (15)
days of the Third Party Claim becoming known to the Sole Stockholder,
acknowledging that such claim is in respect of a Loss described in Section
8.6(a); (B) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief; (C) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of Parent or Buyer, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of Parent or
Buyer; and (D) the Sole Stockholder conducts the defense of the Third Party
Claim actively and diligently.
39
(iii) So long as the Sole Stockholder is conducting the
defense of the Third Party Claim in accordance with Section 8.6(b)(ii), (A)
Parent or Buyer may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (B) Parent or Buyer
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Sole Stockholder (which consent will not be withheld unreasonably); and (C)
the Sole Stockholder will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of Parent or Buyer (which consent will not be withheld
unreasonably).
(iv) In the event that any of the conditions in Section
8.6(b)(ii) is or becomes unsatisfied, (A) Parent or Buyer may defend against
the Third Party Claim in any manner it reasonably may deem appropriate;
PROVIDED, HOWEVER, that Parent shall not consent to the entry of any judgment
or enter into any settlement or agreement to settle a Third Party Claim
without the prior written consent of the Sole Stockholder, which consent shall
not be unreasonably withheld; (B) Parent or Buyer shall be reimbursed by Sole
Stockholder, or Parent or Buyer may deduct such amounts from the next
payment(s) due to Sole Stockholder under the Note portion of the Purchase
Price consideration, promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses); and (C) the Sole Stockholder will remain responsible for any Loss
that Parent or Buyer actually suffers resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 8.6.
(c) Notwithstanding anything in this Section 8.6 to the contrary,
the Sole Stockholder shall not be liable for any amounts exceeding the
Purchase Price.
(d) The Parent and Buyer shall indemnify and defend each of the
Company and Sole Stockholder, and hold them harmless, from and against any and
all Liabilities and/or Losses resulting from or arising out of any breach of
any representation or warranty or agreement of the Parent or Buyer contained
herein, upon identical terms and conditions as set forth in this Section 8.6
with respect to the indemnification given by the Company and Sole Stockholder
to the Parent and/or Buyer.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Except as set forth in Section 9.1(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any Person controlling any such party or any of their
40
officers or directors, whether prior to or after the execution of this
Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate on the date which is two (2) years after the Closing
Date, except that the representations, warranties and agreements set forth in
Section 3.3, and Article IIIA, and Section 6.6, Section 6.7, and Article VIII
and Article IX shall not so terminate.
SECTION 9.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested), or delivered by
overnight delivery service (e.g., Federal Express), to the parties at the
following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to
the fax number specified below:
(a) If to Parent or Buyer:
AIM Group, Inc.
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: President
ATTENTION: Chief Financial Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
ATTENTION: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company or the Sole Stockholder:
Mr. ▇▇▇▇▇▇ Roswell, Jr.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: ______________
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
41
SECTION 9.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"ACCOUNTS PAYABLE" as defined in Section 2.1(e)(i);
"ACCOUNTS RECEIVABLE" as defined in Section 3.18;
"ACCRUED EXPENSES" means accrued salaries and expenses;
"ACTUAL VALUE" as defined in Section 2.1(f)(i)(C);
"ADJUSTED WORKING CAPITAL" as defined in Section 2.1(e)(i);
"AFFILIATE" means a Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person;
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law;
"AGREEMENT" as defined in the Preamble;
"AIM COMMON STOCK" as defined in Section 1.3.
"ASSETS" means any and all properties and assets (real, personal or
mixed, tangible or intangible) of the Company;
"BALANCE SHEET" as defined in Section 3.7;
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence;
"BUYER" as defined in the Preamble;
"BUYER'S VALUE" as defined in Section 2.1(f)(i)(A);
"CERTIFICATES" as defined in Section 2.1(b);
"CERTIFICATES OF MERGER" as defined in Section 1.1;
42
"CLOSING" and "CLOSING DATE" as defined in Section 1.5; "CODE" means the
Internal Revenue Code of 1986, as amended;
"COMPANY" as defined in the Preamble;
"COMPANY COMMON STOCK" as defined in the Preamble;
"COMPANY EMPLOYEE BENEFIT PLAN" as defined in Section 3.22;
"COMPANY MATERIAL ADVERSE EFFECT" means any change or effect relating to
the time prior to the Closing Date that, individually or when taken together
with all other such changes or effects, is or is reasonably likely to be
materially adverse to the business, properties, Assets, condition (financial
or otherwise), liabilities, operations or prospects of the Company at the time
of such change or effect. A Company Material Adverse Effect shall be deemed to
exist if there shall occur any event which relates to the time prior to the
Closing Date and which causes or may reasonably be expected to cause or result
in estimable monetary loss which, individually or when aggregated with all
other events, exceeds Five Thousand Dollars ($5,000.00);
"COMPANY PERMITS" as defined in Section 3.6;
"COMPETING TRANSACTION" means any of the following involving the Company
or any Subsidiary or Affiliate of the Company: (i) any merger, consolidation,
share exchange, business combination, or other similar transaction (other than
the transactions contemplated by this Agreement); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of twenty-five
percent (25%) or more of the Assets of the Company in a single transaction or
series of transactions; (iii) any offer (whether cash or securities) for
twenty-five percent (25%) or more of the outstanding shares of capital stock
of the Company; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing;
"CONTRACT" of any Person means any contract, agreement or instrument of
any type whatsoever (i) to which such Person is a party and by which such
Person either has made a binding undertaking to perform an obligation or is
entitled to any property or right, or (ii) by which any of the Assets of such
Person is bound;
"CONTROL" (including the terms "CONTROLLED," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by Contract or credit arrangement or otherwise;
"EFFECTIVE DATE" as defined in Section 1.1;
"EFFECTIVE TIME" as defined in Section 1.1;
43
"EMPLOYEE BENEFIT PLAN" means (a) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit, group
health, medical expense reimbursement, workers' compensation, dependent care,
flexible benefits or cafeteria, stock option, stock purchase, stock
appreciation rights, savings, deferred compensation, consulting, severance pay
or termination pay, vacation pay, life insurance, disability, welfare or other
employee benefit or fringe benefit plan, program or arrangement; or (b) any
plan, program or arrangement which is an Employee Pension Benefit Plan,
Employee Welfare Benefit Plan or Multiemployer Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2);
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1);
"EMPLOYMENT AGREEMENTS" as defined in Section 7.2(f);
"ENCUMBRANCES" means any Security Interests, Liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever;
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) that together with the Company (or any person whose liabilities the
Company has assumed or is otherwise subject to) would be considered or has
been a single employer under Section 4001(b) of ERISA or would be considered
or has been a member of the same "controlled group," under common control, a
member of the same affiliated service group or otherwise a single employer
within the meaning of Section 414(b), (c), (m) and (o) of the Code (PROVIDED,
HOWEVER, that when the subject of the provision is a Multiemployer Plan only
subsections (b) and (c) of Section 414 of the Code shall be taken into
account).
"ESCROW AGENT" as defined in Section 1.2(b);
44
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended;
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended;
"FINAL TAX RETURN" as defined in Section 6.12;
"FINANCIAL STATEMENTS" as defined in Section 3.7;
"GAAP" means United States generally accepted accounting principles as
in effect from time to time;
"GOVERNMENTAL ENTITIES" as defined in Section 3.5(b);
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium);
"INVENTORY" as defined in Section 3.16;
"KNOWLEDGE" or "KNOWN" means, with respect to a particular fact or other
matter, that (i) an individual is actually aware of such fact or other matter
or (ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter; a Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor or trustee
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter;
"LAWS" as defined in Section 3.5(a);
"LIABILITY" or "LIABILITIES" as defined in Section 3.8;
45
"LIEN" means any lien, charge, encumbrance, mortgage, conditional sale
agreement, title retention agreement, financing lease, pledge or Security
Interest of any kind or type and whether arising by Contract or under Law;
"LOSS" as defined in Section 8.6(a);
"MERGER" as defined in the Preamble;
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37);
"NOTE" as defined in Section 1.3;
"ORDINARY COURSE OF BUSINESS" with respect to any entity, means the
ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency) of that entity;
"PARENT" as defined in the Preamble;
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change or effect that,
individually or when taken together with all such other changes or effects, is
or is reasonably likely to be materially adverse to the business, properties,
Assets, condition (financial or otherwise), liabilities, operations or
prospects of Parent and its Subsidiaries, taken as a whole at the time of such
change or effect. A Parent Material Adverse Effect shall be deemed to exist if
there shall occur any event which causes or may reasonably be expected to
cause or result in estimable monetary loss which, individually or when
aggregated with all other events, exceeds $500,000;
"PARENT REPRESENTATIVES" as defined in Section 5.4;
"PARENT SEC REPORTS" as defined in Section 4.5(a);
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a Governmental Entity (or any
department, agency, or political subdivision thereof) or any other entity;
"POST-CLOSING DATE ADJUSTMENT DATE" as defined in Section 1.2(c)(iii);
"PURCHASE PRICE" as defined in Section 1.3;
"PURCHASE PRICE ADJUSTMENT" as defined in Section 2.1(e)(ii);
"REGISTRATION RIGHTS AGREEMENT" as defined in Section 6.13;
46
"REPLACEMENT NOTE" as defined in Section 2.1(e)(vii);
"SEC" means the U.S. Securities and Exchange Commission;
"SECURITIES ACT" means the Securities Act of 1933, as amended;
"SECURITY INTEREST" means any mortgage, pledge, Lien, Encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar Liens, (b) Liens for Taxes not yet due and payable, (c) purchase
money Liens and Liens securing rental payments under capital lease
arrangements, and (d) other Liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money;
"SHARES" as defined in the Preamble;
"SOLE STOCKHOLDER" as defined in the Preamble;
"SOLE STOCKHOLDER'S VALUE" as defined in Section 2.1(f)(i)(B);
"SUBSIDIARY" or "SUBSIDIARIES" of the Company, Parent, the Buyer or any
other Person, means any corporation, partnership, joint venture or other legal
entity of which the Company, Parent, the Buyer or such other Person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, fifty percent (50%) or more of the capital stock
or other equity interests which the holders thereof are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity;
"SURVIVING CORPORATION" as defined in Section 1.1;
"TAX" or "TAXES" shall mean any and all taxes, charges, fees or levies,
payable to any federal, state, local or foreign taxing authority or agency,
including, without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, AD VALOREM, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall
profits, transfer and capital gains taxes, (ii) custom duties, imposts,
charges, levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto;
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof;
"THIRD PARTY CLAIM" as defined in Section 8.6(b).
47
SECTION 9.4 HEADINGS; CONSTRUCTION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
SECTION 9.5 SEVERABILITY. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
hereto as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement (together
with the exhibits and schedules) constitutes the entire agreement of the
parties and supersedes all prior agreements and undertakings, both written and
oral, between the parties hereto, or any of them, with respect to the subject
matter hereof. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
SECTION 9.7 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.9 WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of any party hereto in the exercise of any right hereunder shall impair such
right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of
any other right. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement. All rights and remedies existing
under this Agreement are in addition to, and not exclusive of, any rights or
remedies otherwise available.
48
SECTION 9.10 FURTHER ASSURANCES. The parties hereto agree (a) to furnish
upon request to each other such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such other acts and
things, all as another party hereto may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in
this Agreement.
SECTION 9.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW.
SECTION 9.12 JURISDICTION; SERVICE OF PROCESS. ANY ACTION OR PROCEEDING
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF,
THIS AGREEMENT MAY BE BROUGHT AGAINST ANY OF THE PARTIES HERETO IN THE COURTS
OF THE STATE OF FLORIDA, COUNTY OF PALM BEACH, OR, IF IT HAS OR CAN ACQUIRE
JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
FLORIDA, AND EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF SUCH
COURTS (AND OF THE APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR
PROCEEDING AND WAIVES ANY OBJECTION TO VENUE LAID THEREIN. PROCESS IN ANY
ACTION OR PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE MAY BE SERVED ON
ANY PARTY HERETO ANYWHERE IN THE WORLD.
SECTION 9.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above by their
respective officer thereunto duly authorized:
AIM GROUP, INC.
By: /s/▇▇▇▇ ▇. ARENA
----------------
▇▇▇▇ ▇. Arena
Chief Executive Officer
AIM SOLUTIONS, INC.
By: /s/▇▇▇▇ ▇. ARENA
----------------
▇▇▇▇ ▇. Arena
President
ENTERPRISE SOLUTIONS GROUP, INC.
By: /s/▇▇▇▇▇▇ ROSWELL, JR.
----------------------
▇▇▇▇▇▇ Roswell, Jr.
President
SOLE STOCKHOLDER:
/s/▇▇▇▇▇▇ ROSWELL, JR.
----------------------
▇▇▇▇▇▇ Roswell, Jr.
50